Can the CPF help us to save enough for our retirement? The answer is Yes. How? Through the magic of compound interest. The 5% compounding rate on CPF Special Account contributions, over a working lifetime, means that by the time you retire, you will have three times as much in the Special Account as you have put in over the years.
Minister Tan Chuan-Jin explained this in Parliament today. Listen to him do the sums for Ben, a young polytechnic graduate just getting married and starting to work. – LHL
- Never underestimate the ability of compound interest. Besides, the interest is like buying into a long term bond.
- “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” – Albert Einstein
- Compound interest = interests earning interests earning interests earning…. 5% guarantee compound returns. Good leh.
- The magic of compound interest. With MOM Minister Tan’s illustration using very conservative assumptions, all working adults should sleep well.